The residential real-estate industry in the US has $1.6T in annual sales and $60B in annual gross brokerage commissions. The residential real estate brokerage industry has traditionally been very labor intensive and the industry relies heavily on individual real estate agents working as independent contractors to recruit service and to manage business transactions. The fact that these real estate agents operate independently and that most real estate brokerage operations are focused on short-term profitability has led to under-investment in efficiency-enhancing technologies and processes for these businesses. The industry has generally lagged behind other industries in terms of its use of state-of-the-art computer and Internet technologies for productivity gain and product or service differentiation.
A. Repetitive Tasks of Agents
The daily tasks that are performed by real estate agents are repetitive and time-consuming. This inefficiency is accentuated by the fact that virtually every home on the market is unique, every location of home sites has distinguishing characteristics, and the conditions and situations of every sale have been different. New or resale homes come on the market on a daily basis. Buyers' agents usually visit homes on the market and match these homes with their clients' requirements. The agents match these homes against various criteria like the size of the home; the amenities of the individual rooms of the homes; the location of the properties; the availability of commercial services such as restaurants, coffee shops, grocery stores, etc.; the suitability of schools; the proximity to transportation infrastructure; the condition of the other homes in the neighborhood and many other factors. A lot of the times the agents have to physically preview properties to get an accurate assessment of these factors. Having to physically visit these properties is a very time consuming activity.
B. Spread of Housing Geographic Area Targets
In the United States, residential real estate values have risen greatly in recent years, outpacing the increase in income levels of the general population. As a result, housing affordability has diminished significantly, especially in the Northeast and West Coast regions of the United States. This phenomenon has forced many buyers, especially first-time buyers, to search for homes in larger geographic areas, including farther-flung suburban communities. This geographic expansion presents a new problem for real estate agents, as real estate agents traditionally have typically concentrated on a small area covering a limited number of cities. Real estate agents often do not have intimate knowledge of every area where their clients may wish to search for homes, and they therefore cannot provide good service and support to their clients—at least not efficiently.
C. Quality of Service Provided by New Agents
A similar problem exists when a new real estate agent joins the industry. They may not possess the knowledge of local neighborhoods and thus it may be difficult for them to provide good quality service. As a result these new agents have to spend an unaffordable amount of time researching the areas and properties, or else they may not be able to provide a desirable quality of service to their clients. This learning curve presents a significant overhead cost for the real estate brokerages in bringing in new agents, and the impact on quality of service may affect the brand value of the operation.
D. Property Information Database and its Limited Data
When properties come on the market for sale, properties are generally listed in a real estate professional community-owned system. The Property Information Database (PID) system that is used in most parts of the United States is called a Multiple Listing Service (MLS). For the purpose of discussions in this document, a PID refers generically to the various kinds of Property Information Databases such as a MLS database, or other similar kinds of databases containing real estate listing property information. These PID systems are individually owned by local Realtor associations, and they include some basic data for each listed property. The listing data is usually hosted on some computer database that is run by a separate company and is accessed remotely over the Internet by individual agents. When a real estate agent obtains an agreement to sell a property, the agent usually puts information about that property into a PID system immediately so that other agents can view that information. The completeness and accuracy of the information about a property on the market depends on what data the listing agent inputs. Frequently this information in the PID databases is not accurate, or some pertinent information is missing. This inconsistent availability of data presents a challenge for the real estate agent trying to serve the buyer, and for the buying clients themselves, because they cannot assess the suitability of in inadequately listed property very easily. They may then have to physically visit such properties to evaluate their suitability. Again, this presents a cost and efficiency challenge for both the agent and the buying client.
E. Use of Computing Power
The real estate brokerage industry is highly undifferentiated in terms of the services provided by each individual firm in the industry. Real estate agents' ability to serve clients is often limited by the availability of time as all the processes are done by humans and information is manually pulled from different resources. Technology has only been used to replace old means of communication, such as emails replacing phone calls, and electronic documents replacing printed flyers and papers.
F. Availability of Market Data
The purchase of a home is frequently the largest investment anyone makes in his/her life. However, the availability of market trends and data to individual home buyers is very limited. The publicly available data that currently exists is primarily found in local newspapers. This limited set of data is frequently not available all the time. The market information that is useful for home buyers includes housing availability, housing price movements in local, state-wide, regional and national levels, housing price movements for particular kinds of properties of certain sizes and types, interest rates of different types of loans, interest rates trends and changes over time, income levels of different local and regional areas, population movements, etc. All these data together may help potential buyers decide when, where and what to purchase. A lot of this market information is accessible to real estate agents through the PID databases and other county recordation resources. However, it is difficult as well as very time consuming for these agents to identify and gather the data, and thus the information is practically not available to the agents or the buyers.
G. Non-Intuitive Computer Search Techniques
Existing computer software programs and Internet websites allow users to enter search criteria by selecting different attributes that are available. Users currently select these attributes by such methods as selecting from drop-down boxes, clicking on radio buttons for alternative selections, checking boxes for different values, etc. However, these ways of searching make users unnecessarily go through many menus of options and attributes to enter their selection criteria. These structured search options do not provide an intuitive way for users to think about the kind of real estate properties that the users are really looking for.